Exxon to Spend More on Chemical Plants

Published: March 10, 2005

The Exxon Mobil Corporation said yesterday that it planned to increase spending on refinery expansions and chemical plants in the next five years to raise profit from sources other than oil and natural gas wells.

Spending will rise toward the end of the decade as plants are built and expanded in Asia and the Middle East, the chief executive, Lee R. Raymond, told investors and analysts yesterday. He did not give spending estimates.

The company is expanding a chemical factory in Singapore and has a venture that is building a plant in China. By contrast, two rival oil companies, BP and Total, are shedding chemical operations after excess capacity and a drop in demand in 2002 sharply reduced profit margins on chemicals.

''Some of our competitors measure their business by a much shorter time frame than we do,'' Mr. Raymond said.

Exxon Mobil's chemical earnings more than doubled last year, to $3.43 billion. The company increased output 5 percent to meet rising demand in Asia and the Middle East for petroleum-based chemicals used to make plastic, paint and rubber.

The president of Exxon Mobil, Rex W. Tillerson, said that global chemical demand was rising 5 percent a year and that ''tightening supply-and-demand balances'' would keep prices high and margins wide. He also said that capacity additions by other producers would probably be too small to create market excess.